that such modern inputs afford (8). The state of knowledge with regard to the economics of the supply of food can perhaps be summarized best in terms of the following propositions—fluctuations in weather and other natural vicissitudes aside.
1. Farmers in low income countries are not indifferent to changes in economic incentives, i.e., to changes in farm product and factor prices. Empirical analyses of the response of farmers to changes in price leave little room for doubt on this issue; the responses are clear and they are consistent with economic conditions (1, 8, 14-26).
2. Farmers respond to the market demand—including their own demands—provided the market demand is correctly revealed to them in the prices that farmers receive for their products and pay for the inputs they purchase (1,17, 24, 27-30).
3. The prices that farmers receive for their products can be depressed or enhanced by government policy. How long this can be done is an unsettled question. The governments of several of the larger low income countries were able to depress the prices of farm products during the 1950's and early 1960's, some of them with the assistance of P. L. 480 food grain imports from the United States (1, 29).
4. In some countries farmers are dependent on the factors of production that they are accustomed to and know the value of from long experience; after years of trial and error they have arrived at an economic equilibrium with respect to the production possibilities of these factors. Where these conditions hold, agricultural production is niggardly, in the sense that there are no gains in productivity from increases in the application of additional quantities of such factors.* This proposition does not imply that the total production will not increase. What it implies is that the gains in productivity associated with the use of agricultural inputs of better quality, including new forms of superior inputs, will not be realized (1,5,8).
5. As modernization of agriculture advances, the supply of food becomes more "elastic." What we observe, however, consists mainly of shifts in the supply schedule. The increasing role of agricultural inputs that are purchased by farmers is a major explanatory factor of the tendency toward a more elastic supply.
6. The favorable shifts in the supply, defined as increases in production at some constant price, or at a somewhat lower price relative to consumer prices, are a consequence of improvements in the underlying agricultural production possibilities.
7. The sources of these improvements are to be found in developments outside of agriculture. They come largely from the following sources:
*This proposition is based on an economic conception of traditional agriculture as it is formulated in my Transforming Traditional Agriculture (8, Chapters 2, 3, 5, 6).